Friday, April 10, 2009

Ontario regulator asked to improve reporting and disclosure standards

The Ontario government has passed a motion calling on the province’s securities regulator to review current corporate reporting standards and to produce recommendations for enhanced disclosure.

The resolution calls on the Ontario Securities Commission to review its current reporting requirements, consult with concerned stakeholders and to produce recommendations to enhance disclosure. The OSC should be aiming “to establish best practice corporate social responsibility (CSR) and environmental, social and governance (ESG) reporting standards,” the resolution states.

The motion, which passed unanimously yesterday, calls on the OSC to report back to the Minister of Finance by January 1, 2010 with recommendations. The private members’ bill was introduced by Liberal MPP Laurel Broten, a former Ontario environment minister.

“I am so pleased that the Ontario legislature provided its support for this important initiative,” Broten said in a news release. “With the current economic downturn, it is more important than ever to enhance disclosure in an effort to provide greater confidence and protection for individual investors as they seek to make investment decisions.”

Sustainable and social investment groups are strongly supporting the resolution.

“The Social Investment Organization believes this consultation will be an important step forward in bringing ESG disclosure to Ontario and, possibly to other jurisdictions, through the Canadian Securities Administrators," says SIO executive director Eugene Ellmen. “This is an important public policy priority for the socially responsible investment industry. I have already indicated the willingness of the SIO to work with the OSC on the consultation.”

“There is a double-win opportunity here: investors get richer information with which they can make better decisions, and those decisions will in turn incentivize companies to improve their performance of climate change and other sustainability risk factors,” added Matthew Kiernan, chief executive of Innovest Strategic Value Advisors. “The proposed measures would catapult Ontario into a position of not only national leadership, but match best-practice internationally.”

“Greater transparency, or disclosure, of environmental and social factors is a practical, affordable and feasible method of improving the quality of the information investors use to assess the investment options available to them,” says SHARE executive director Peter Chapman.

Institutional investors will also benefit from the consultation, says Jane Ambachtsheer, national partner at Mercer. “Hundreds of pension funds and asset managers representing trillions of dollars regularly seek heightened disclosure from the companies they invest in,” she said. “The recent rise in global investor collaboration has been phenomenal. Investment fiduciaries want to know how companies are managing environmental, social and governance factors because they need this information to effectively manage the related risks, and seize the opportunities.”

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